Why are prices higher in Canada than in the US?

[CanadianDaniel]

Just posted a short article analyzing a Senate Committee report on Can-Am retail price discrepancies. That 64-page report theorizes that these differences will disappear over time, but I'm not so sure.

I'm interested in finding out what forum members think is really driving higher consumer costs in this country. Just as importantly, what can we do about it?

Cheers!

[Natalka]

We had a good discussion about this last month.... though it should be ongoing!

http://forum.smartcanucks.ca/340383-...ensive-canada/

[sweet sparrow]

I think the main reason prices are higher in Canada than in the U.S. is that people are willing to pay the prices set by manufacturers. There are many people that walk into a store and pay the list price, there are some people who wait for a sale, and there are even fewer willing to spend time on research to know when to ask for a lower price. Consumers don't really have time anymore to haggle for half an hour, drive to another store, repeat, etc. on an outcome where they won't be guaranteed the price anyways. Cross border shopping is another issue riddled with cons, since you have to add in the cost of gas, the shopping trip is practically a day's excursion (and is that time worth your money?), wait times at the border (last time it was three hours for me, idling and wasting gas), fighting with other Canadians over limited supply (and you know you have to be there early), no haggling (because there's another Canadian in line behind you, ready to hand over cash for the item you deem is overpriced), not to mention the complaining kids or spouse about what they could be spending their wasted time on. I also add in the cost of a passport and picture if you're not using it for travel or work purposes also (+ all those with whom you're travelling with unless they're outside of your own family).

Also, the Canadian minimum wage may be higher than our US counterparts, but we do have higher taxes and less purchasing power. Yes, we have "free" healthcare, but it's only worthwhile to Canadians who use it or would have spent more money if they had no coverage.

As companies, Canadian branches also have higher costs for shipping and transporation. Transport companies charge higher fees to bring in goods and raw materials across the border. The answer to our protests on these higher fees? Well, you don't have to pay us. Just close your doors because there are other companies who will pay it. And we have seen many Canadian companies get bought out by their US counterparts.

Another reason is profit. There is no such thing as a company who goes into business to lose money. It's not in their goals. For example, if peanut butter increases in price from $1.99 to $3.99, you have the option of not buying peanut butter, making your own peanut butter, or buying it at the new price. Most people will consider it a staple and buy it at the new price. If the price of raw materials go down, companies will never lower their prices unless they're trying to gain market share. They will take the $2 per bottle profit and watch their stock prices rise, keep employees happy by offering wage increases, improve facilities, etc. Can't we all think of a million things to do with more money?

These are only a few simple reasons IMHO, but I'm sure there are many more (i.e. financial, social, political, …). The bottom line is that it's up to us to accept them. Do you need that new toy for your child or will someone else's older version work? Did you want to spend extra time shopping for "deals", or are you able to do the same job with materials you have at home? We suspect we're the only family on our block to not have cable on our one enormously heavy, old CRT TV that was donated (the other family got a new fancy HD flat screen), but we likely won't buy one until it breaks. Or someone changes the one channel because the remote was stolen years ago. Maybe I'll cave one day. But until then… Vive la XBox!

[bluecat]

I think the main reason prices are higher in Canada than in the U.S. is that people are willing to pay the prices set by manufacturers. There are many people that walk into a store and pay the list price, there are some people who wait for a sale, and there are even fewer willing to spend time on research to know when to ask for a lower price. Consumers don't really have time anymore to haggle for half an hour, drive to another store, repeat, etc. on an outcome where they won't be guaranteed the price anyways. Cross border shopping is another issue riddled with cons, since you have to add in the cost of gas, the shopping trip is practically a day's excursion (and is that time worth your money?), wait times at the border (last time it was three hours for me, idling and wasting gas), fighting with other Canadians over limited supply (and you know you have to be there early), no haggling (because there's another Canadian in line behind you, ready to hand over cash for the item you deem is overpriced), not to mention the complaining kids or spouse about what they could be spending their wasted time on. I also add in the cost of a passport and picture if you're not using it for travel or work purposes also (+ all those with whom you're travelling with unless they're outside of your own family).

Also, the Canadian minimum wage may be higher than our US counterparts, but we do have higher taxes and less purchasing power. Yes, we have "free" healthcare, but it's only worthwhile to Canadians who use it or would have spent more money if they had no coverage.

As companies, Canadian branches also have higher costs for shipping and transporation. Transport companies charge higher fees to bring in goods and raw materials across the border. The answer to our protests on these higher fees? Well, you don't have to pay us. Just close your doors because there are other companies who will pay it. And we have seen many Canadian companies get bought out by their US counterparts.

Another reason is profit. There is no such thing as a company who goes into business to lose money. It's not in their goals. For example, if peanut butter increases in price from $1.99 to $3.99, you have the option of not buying peanut butter, making your own peanut butter, or buying it at the new price. Most people will consider it a staple and buy it at the new price. If the price of raw materials go down, companies will never lower their prices unless they're trying to gain market share. They will take the $2 per bottle profit and watch their stock prices rise, keep employees happy by offering wage increases, improve facilities, etc. Can't we all think of a million things to do with more money?

These are only a few simple reasons IMHO, but I'm sure there are many more (i.e. financial, social, political, …). The bottom line is that it's up to us to accept them. Do you need that new toy for your child or will someone else's older version work? Did you want to spend extra time shopping for "deals", or are you able to do the same job with materials you have at home? We suspect we're the only family on our block to not have cable on our one enormously heavy, old CRT TV that was donated (the other family got a new fancy HD flat screen), but we likely won't buy one until it breaks. Or someone changes the one channel because the remote was stolen years ago. Maybe I'll cave one day. But until then… Vive la XBox!

GREAT ANSWER! But is really sucks that we have to pay more than our US counterparts, when we have been in par with US money or even a bit more for about 6 years!

[Darth Penguin]

Move to Europe or Australia, New Zealand, South Africa...

The MARKET is driven by a lot of variables.to say one country is getting better deals than another shows a lack of underatanding of the global market.

[GoStumpy]

I just accept the fact that US has 300+ million, and we have 30+ million... with 10x the consumers, they can charge lower prices!

[super807]

I watched an episode of Marketplace on CBC recently that was dealing with this same issue. Apparently, part of the answer is that the wholesalers that sell to retailers have 2 price lists - one for retailers in the US and a different one for those in Canada. The price list for Canadian retailers can be anywhere from 20 to 100% higher than in the US, which translates to higher retail costs.

Clearly it is not the only factor, but it is a part. Why wholesalers continue to have higher prices for Canadian retailers is a whole other question.

[GoStumpy]

A very complicated question...

I know when I order parts in from the US I have to pay brokerage, so I have to charge more...

[ilovecoupons23]

maybe because the US has more people, when they import goods they can get a larger quantity which would mean a lower cost per unit compared to Canada. When they manufacture goods they produce them on a larger scale which results in more efficiency. Also I know Canada has higher standards for food quality. A chicken in the US only grows for 6 months and is fed tons of hormones to make it bigger that way they can make more profit from it. Also cows are fed hormones so they can produce more milk. To me the cheapest price doesn't always mean the best quality. I would rather pay double for meat in Canada then go to the US and risk my health.

[Freestuffrighthere]

I remember I learned in business class that our Canadian government put a higher tariff on import goods to protect Canadian business owners. So, when the US stuff got to Canada, it is the US price + tariff= higher price (price we pay here), and this way Canadian manufacuter doesn't experience that much of price competition.

[Peachaso]

Scale, tariffs, transport, etc.